US Treasury buybacks a ’mistake’ costing credibility, says Druckenmiller

Billionaire investor Stanley Druckenmiller claims that U.S. Treasury buybacks are a grave mistake that are eroding the market's credibility and missing an opportunity for debt reform. The former colleague of Treasury Secretary Scott Bessent argues that the recent announcement to double long-end buyback lots to $4 billion should be seen as price management and a mistake.

Druckenmiller, who views the long bond yield as the most important price in the world, says intervening risks further buybacks to defend it, and damages the Treasury's reputation for reliability. He points out that these large operations coincide with the final stages of a midterm campaign, which could further damage the Treasury's credibility.

The expert emphasizes that debt management should not be influenced by the political calendar, as it is crucial to preserve the long-established credibility of the Treasury market. Druckenmiller calls for a return to the original purpose of buybacks - small and scheduled - and urges addressing the primary deficit to lower long-term yields.